Limitations of Ratios:

Have you ever thought the financial world backbone that indicates so many strategy of investment has limitations that needs to be understood by People at large?
A simple Current Ratio or even Debt to Equity (Net worth) Ratio has different interpretation. For instance: Theoretically, A high current ratio indicates CA > CL by that many times its benefits can be read in all of the books or a CR <1 indicates short term liquidity crunch for the company.
HLL Hindustan Lever now known as HUL maintains a higher current liability than its current assets meaning it has got few of its fixed assets financed by the Current liabilities than the big question is how it manages its cycle so well.
A debt equity ratio of 2:1 theoretically says fine for the company, what about banking, and financial institutions. Forget that it’s a business specific thingy agreed what about companies in real estate space offering paper to lenders. Still one goes out and buy the stock of the company.
Ratio of PE 6 and PEG of 0.5 seems expensive but a stock at a PE of 12 and PEG of 0.8 still looks attractive. Think about it before we answer.

5th P of Marketing Mix – Packaging

Did you ever think that what rating would you give to Product, Price, Place, Promotion and the 5^th P (Packaging) on a likert scale? Or to what extent are they inter-related?

We claim that there is numerous benefit of packaging. But is it only addition to image and identity of a company, protection, artistic, ethnicity, mode of transportation, identification of goods, identifying and promotion of company, communication to target audience, it’s utility, brand association and brand building? Or do you think the gain of packaging is a never ending list?

Do you think the new packaging of lifebuoy increased the sales of lifebuoy? Have you ever thought how does the company quantify it?

We cannot deny the fact that for many brands the packaging usually sets the tone for all of the other communications efforts establishing the brand’s overall look and feel.

But these days there is another concern revolving in the minds of consumers related to marketing. Packaging material! Have you ever thought on the extent of threat to the environment and homosapiens survival by the so called attractive packaging material which one’s claim that it helps the company a lot?

Give it a serious thought from now onwards, as these issues are likely to come at some point of time in your life either as a consumer or as a marketer.

Share your thought on this!

THE CASE OF CORE BUSINESS WITH NON- CORE BUSINESS ACTIVITIES

KK DYES AND CHEMICAL (P) ltd. is having a net worth of 60 crore. The company is expanding its business operations in places other than Gujarat and Uttar Pradesh. The company reported a net profit of Rs. 10 crore for the fiscal year 08-09.The company PBIT stood at Rs. 27.3 crores. After the company goes for expansion the company will generate Rs 35 crore (PBIT). The amount that is required to fund the project is estimated at Rs. 62 crores. The real benefit that will accrue to the company is from 2011 due to fertilizer policy that will add to the bottom line Rs 5 crore. The company is having a debt equity mix of 2:1. The financial institution has offered the company that the fresh loans can be raised at 18% if debt equity goes beyond 2:1. The company wants to expand in order to benefit from the new fertilizer policy.the promoters are in no position to contribute fresh capital The company hires you as a consultant in order to recommend how to finance the project needs. The promoters are ready to use accruals of the firms. The company has provided you with the financial statements and the expectations in terms of PBIT are provided above. Recommend what should be done by the firm in order to make the project feasible. The expectation of the owner in terms of cost of capital is next to nil from additional investment. However they will not accept if the project uses the current cash flow generated by the company. The company will accept the recommendation of the consultant and he will receive huge rewards if the project kicks in but if lay out for funding is not prescribed than the company need not pay anything to the consultant. Being a consultant you have to find a feasible solution or walk away without any reward...... Other details available through mail
If you are interested in getting the details of the entire case., relevant facts on it and solve the case. Write to us asking for a copy of the same @ splconquest@gmail.com. Before that make sure you add yourself to the followers list. This case is available only for the followers of SPL Conquest team.

Generic Cricket

Eat cricket, sleep cricket and watch cricket. This is the mantra that is being preached all over India and has been spreading to other parts of the world as well.

I believe that T20 is more acrobatic and explosive form of game. But again a second thought comes to one’s mind that how about the Test format, where real qualities of players are tested in terms of stamina, concentration, legerity and talent. But don’t consider me an old grouch that I cannot see the benefits of pulling in young fans, market opportunity and increasing TRP ratings.

But is this format of game promoted with a mere intention of garnering more revenue with celebrities coming into limelight followed by auction of players as if they are some commodities or is it a sign of changing mindset? My friends claim that it is stealing the show from the longer version of game, more so specifically from one day format.

More so importantly, I think that it is a life saviour for few players who when used to fail miserably in one day format, could see hooligans on the street burning their photographs/home or welcoming their failed team with black flag.

Do you think that in the near future 50-50 format would fade away and T20 format would have tough competition with S6 format, keeping into consideraton the fast pace of life? And don’t forget 5 day format!

But are we diverting from technical cricket and has been woweed by these money-spinning business? So what do you want – classical shots or rock and roll cricket? Choice is yours!

Post your comment or send us your feedback at splconquest@gmail.com

Decoding the New tax Code

The decades old tax regime comes to an end next fiscal. One set of group who will not be happy are the Chartered Accountants and Lawyers( filing eturns) because they will have less of extra income for tax planning. Decoding the tax code but before that give a thought on the above issue with following questions-

Do you take any indication with the new tax code?

How markets will be impacted think about it?

How your personal income is affected?

Does it favor the rising middle class? Think why?

How does it impact the tax regime?

If you think you got it? Wait for us to match your thought with numbers and facts

Its not what this seems to be

Friends we are working with numbers to give you better insight. Keep following the blog.

" Open your mind like a parachute it works only when its open

Write to us for any query splconquest@gmail.com

Priavte Label – Worth Practising??

Do you think that the rift is only between organized retailer and unorganized retailer? What about the threat to national brands with the introduction of private labels by organized retailers? Replacement of private labels has been widely practised by foreign counterparts – Wal-Mart, Tesco, Carrefour, Metro and biggies in this field.

Given below are some facts and figures which would force you to think how and why did it happen:-

· International retailers like Wal-Mart of USA and Tesco of UK have 40% and 55% own label brands representation in their stores, respectively.

· According to KPMG study, globally private lables contribute 17% of retail sales with a growth of 5% p.a.

· In India private labels constitute 10-12 per cent of the organised retail product mix.

· Among the major Indian players, the degree of private label penetration was the highest in Trent with 90 per cent, followed by Reliance Retail (80 per cent), Pantaloon (75 per cent), Nilgiri's (38 per cent), Indiabulls/Piramyd (30 per cent) and Foodworld (22 per cent).

But do you think that the future looks bright for retailers with the introduction of private labels? How about customization, identifying and filling the customer’s value expectation, supplying minimum threshold quality, maintenance of store’s quality standards, and assortment of products? Apart from these criteria, nummber of other sensitive issues needs to be taken care of in order to push up brand and store loyalty. Or is it the willingness of cosumers to down-trade? But they have to make sure that they do not exercise over private labelling. Line extensions provide another lesson for retailers.

But what do you think are the steps that a national brand manufacturer shoud deploy to mitigate this risk? Do you think that fighting selectively, coming up with offereings frequently and moving out of those categories where the products do not make a symbolic or emotional difference would turn out as a saviour for them?

What do you think should be the next step of the retailers when they have never been able to brush aside the affront of being called cheaper brands?

Send your feedack/Post your comment or mail to us for any query at splconquest@gmail.com

Is the ban on surrogate advertisement justifiable?

The importance of advertisement cannot be lowballed, but at times they are accused of misguiding people at large. When such accusations are proved, some advertisements are scraped off from media. That did happen with ads endorsing alcoholic drinks and cigarettes. But how can we forget brand extension? And these are deployed to bypass the advertisement ban.

Surrogate advertising is prominently seen in cases where advertising a particular product is banned by law. Advertisement for products like cigarettes or alcohol which are injurious to heath are prohibited by law in several countries and hence these companies have to come up with several other products that might have the same brand name and indirectly remind people of the cigarettes or beer bottles of the same brand.

Few surrogate advertisements shown in print, electronic and outdoor media are - Bagpiper soda and cassettes & CDs, Haywards soda, Derby special soda, Gilbey green aqua, Royal Challenge golf accessories and mineral water, Kingfisher mineral water, White Mischief holidays, Smirnoff cassettes & CDs, Imperial Blue cassettes & CDs, Teacher's achievement awards etc.

But do you think that the laws framed to curb surrogate advertisement such as Cable Television Network (Amendment) Rules 2009 are effective? How about OOH media tool?

Tune into the coverage of Formula 1 racing and you will see cars racing around circuits of the world with the names and logos of tobacco and liquor companies emblazoned on every part of the vehicle and the driver, and do you still remember Royal Challengers (Royal Challenge) Bangalore, and how about Wills Lifestyle(Wills)? Does this mean that ITC cannot advertise its products in Indian events even though it is a major contributor to the exchequer in terms of excise and duties? And the list continues!

But I think that instead of discussing more on this substitute adverisemet, we should focus more on - If it is legal to manufacture, distribute and sell a product, why should it be illegal to promote the sale of that product?

I don’t think anyone can answer that question convincingly. If it has been established conclusively that cigarette smoking kills, why is it that it is available to us?

Mail us your thought on this at splconquest@gmail.com

Just Interpret

Hi Friends from Finance Stream,

Just interpret the results and think why this year will be different from last 30 years for Sensex. A challenge that will help you people to think rationally.

All the best. Mail us your answers @ splconquest@gmail.com